EU HRC demand outlooks largely bearish for H2 as market braces for CBAM

North European flat steel prices have remained largely suppressed through the first half of 2025, with hot-rolled coil prices failing to gain momentum as poor demand and consumption offset any attempt by mills to increase prices, and expectations dimming for any significant improvement until after September.

Heading into the second half of the year, market outlooks are generally unchanged, with many across the value chain citing poor expectations around demand and increased industry consternation over the impending Carbon Border Adjustment Mechanism legislation.

The North European HRC price was assessed by Platts, part of S&P Global Commodity Insights, at Eur570/mt ($672/mt) ex-works Ruhr on June 30. The price for HRC in the region peaked at Eur655/mt on April 23, with some mills reporting offers as high as Eur700/mt during that period. Despite this attempt by suppliers to push prices up, it failed to manifest in the spot market, with the price gradually descending through the second quarter to the current assessed level.

Compared to H1 2024, monthly average HRC prices through 2025 have typically been weaker, failing to exceed Eur650/mt, though strengthening considerably from the outset of the year when the ex-works Ruhr price was assessed at Eur574/mt. Meanwhile, in January 2024, the monthly average was calculated at Eur735/mt ex works Ruhr, before falling to Eur590.36/mt in April 2024, then stabilizing until Q3, as demand remained otherwise subdued.

Summer 2025

Market participants are bracing for a quiet July and August, with many mills and buyers taking a step back. "Mills are not fully booked even after the summer," a service center source said. While some anticipate stronger activity from August -- driven by pre-CBAM demand and clearer policy signals -- few are willing to take large positions before then.

Although some European mills reported stronger order books, the recent trend of increasingly competitive offers suggests that a large amount of capacity remains open, reiterating the negativity surrounding demand in the market.

A Northern European seller also noted general hesitancy from buyers due to the downturn in prices ahead of the summer period, and limited forward clarity on order books. He said, "there were some bookings, [domestically] and with imports, albeit not huge quantities, but end-users are split, and some are waiting for prices to go lower."

"Mills do not have very good order books and they want to overcome this summer period by offering reasonable prices."

Service center sources across Europe also noted high levels of competition with mills and other re-rollers for relatively small volumes, adding further pressure on prices.

Imports undercut domestic prices

Import offers remained aggressive through late June, with Indonesian and Turkish-origin HRC reported as low as Eur470-480/mt CIF Italy, well below domestic ex-works values of Eur530-550/mt. Indian offers hovered at Eur500-520/mt CIF Italy, with similar levels reported on a CIF Antwerp basis for Northern Europe.

A Germany-based mill source noted that buyers are closely watching quota levels, especially for Indonesia, which saw heavy bookings in the last quarter. "The window is closing for most origins," the source said, pointing to a significant inflow from India and Indonesia in recent weeks. The European Commission has been urged by industry groups to consider further safeguard enforcement and potential antidumping measures.

Market participants reported minimal restocking activity, with several buyers postponing decisions until after the summer. The summer break has started in many parts of Europe, and mills remain only partially booked even for post-holiday periods. A distributor noted that many buyers are only covering basic requirements and holding off major procurement until clarity on safeguard measures, CBAM, and overall policy direction emerges.

Although the hunger for imports through 2025 has been largely suppressed in part due to a myriad of safeguard changes and the potential for longer lead times, they initially presented an attractive opportunity due to bullish domestic prices. But this favorable domestic-import price differential was short-lived, and as reflected in the exhaustion rate of the Q2 European import quotas for HRC, there was still a clear preference for domestic steel, or specific import origins. Likewise, as domestic prices turned, many buyers within the market held back, either due to ample stocks or for the opportunity to buy at lower prices.

In total, 65% of the Q2 HRC import quota remained on June 30, with only South Korea exhausting its import allocation, and Turkey using 94% of its quota. In comparison, Indian-origin imports were out of favor, with only 7% of their country-specific quota used throughout the entire quarter.

Forward views

Looking ahead, sources continue to offer mixed views about the import market. As the EU's CBAM looms on the horizon of 2026, many have suggested that there could be a deluge of imports, as buyers attempt to avoid the mandatory carbon reporting requirements from the legislation, with more activity expected from August onward as sources remain uncertain on how the new legislation will impact prices in both the short and long term.

"People are now taking positions considering CBAM. Prices have likely bottomed out on imports," a trader said.

A major European trader also highlighted the challenges: "If vessels arrive in December and are cleared in January, CBAM liabilities could be triggered. That's a big risk."

Other market participants stressed that this could see increased competition for imports across key origins, while also lending support for domestic prices as buyers opt for lower-risk options. "[There is] an expectation that in Q4 prices will rise, CBAM could put Eur60-70 on price, and the risk of antidumping duties and safeguards is still there," said a German distributor.

In comparison, the import quotas for Q3, although just refreshed, have already started to be squeezed for certain origins. On July 3, only 19.5% of South Korea's HRC remained for allocation, compared to the next most popular defined origin, Turkey, which has 86.4% of its approximately 479,925 mt quota still available.

Throughout Q2, market participants noted increased preference for Indonesian-origin HRC, stemming from the country's absence from any form of import quota and competitive offers, despite longer delivery times from the region. However, it has been suggested that with CBAM around the corner, buyers will place greater incentive on procuring HRC with a lower emissions footprint, reducing any potential or additional costs at the border.

Despite the typically negative outlooks, some in the market remained more optimistic. "People are more positive, the German industry is not so bad anymore, but it depends on what product we're talking about," a German distributor said.

Similarly, a mill source said: "We have seen a little more positive feedback, and sentiment is pointing upwards. It seems like the price level we have right now is the bottom, and contractual business is better."